Custom, Excise & Service Tax Tribunal
Lancet Pharma Pvt. Ltd vs Commissioner Of Service Tax on 9 July, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.ST/85611/13 (Arising out of Order-in-Original No.35/ST/SB/2012-13 dated 30/10/2012 passed by Commissioner of Service Tax, Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) 1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether Their Lordships wish to see the fair copy :Seen of the Order? 4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Lancet Pharma Pvt. Ltd., Appellant Vs. Commissioner of Service Tax, Respondent Mumbai Appearance: Shri.Badri Narayanan, Advocate for appellant Shri.K.S.Mishra, Addl. Comm. (AR) for respondent CORAM: Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial) Date of Hearing : 09/07/2014 Date of Decision : 09/07/2014 ORDER NO Per: P.R.Chandrasekharan
1. The appeal and stay petition are directed against Order-in-Original No.35/ST/SB/2012-13 dated 30/10/2012 passed by Commissioner of Service Tax, Mumbai. Vide the impugned order, the adjudicating authority has confirmed a service tax demand of Rs.2,49,80,120/- along with interest thereon and also imposing penalties under Section 76, 77 & 78 of the Finance Act, 1994. Aggrieved of the same, the appellant is before us.
2. The facts of the case are that the appellant, M/s.Lancet Pharma Pvt. Ltd. rendered the services of Manpower Recruitment or Supply Agencys Services to M/s.Cipla Ltd. During the course of the audit of the records of the appellant firm, it was observed that there was a difference between the value of taxable services declared by the appellant in their ST-3 returns and the value reflected in the books of accounts maintained by the appellant. It was also noticed that the appellant had not discharged service tax liability on the TDS amount deducted by the recipient of the services. Therefore, service tax was demanded on the difference between the values shown in the books of accounts and the values declared in the ST-3 returns as per which there was a difference in value of Rs.23,83,83,231/- and the service tax liability thereon worked out to Rs.2,49,80,120/- and which has been confirmed in the impugned order.
3. The learned Counsel for the appellant submits that while computing the service tax demand, the department has taken into account only the debit entries made by the appellant in their journal in M/s.Ciplas account. However, these debit entries were made wrongly and subsequently they were reversed. Thus the reversal made by the appellant has not been taken note of by the authorities below. Similarly, it is their contention that they had also discharged the service tax liability on the TDS amount deducted by the recipient of the service. They had furnished a reconciliation statement, reconciling the various entries, duly certified by a Chartered Accountant to the adjudicating authority. However, the adjudicating authority, on his own got, the verification done through the Assistant Commissioner of Audit and based on the verification report given by the said Assistant Commissioner, he has come to the conclusion that the appellant has not discharged the correct service tax liability. This verification report of the Assistant Commissioner of Audit was never given to the appellant for comments/rebuttal. In the absence of non-furnishing of the verification reports prejudice has been caused to the appellant and therefore, the matter has to go back to the adjudicating authority for providing an opportunity to the appellant to rebut the contentions raised in the verification report and if such an opportunity is given, they would be able to convince the department that they have discharged the service tax liability correctly. Accordingly, he pleads that the appeal be allowed by way of remand.
4. The learned Additional Commissioner (AR) appearing for the Revenue fairly submits that the copy of the verification report dated 13/10/2013 was not furnished to the appellant for comments/rebuttal.
5. We have carefully considered the submissions made by both the sides.
5.1 While the department had opportunity to verify whatever information/statements furnished by the appellant, a copy of the verification report should have been provided to the appellant to make their submission/rebuttal. Inasmuch as a copy of the verification report has not been given to the appellant for their comments/rebuttal, there is a violation of principles of natural justice. The adjudication manual of the CBE&C also lays down guidelines to the effect that if a new fact is emerging from the verification/investigation caused by the department, the assessee should be given an opportunity to make a submission/rebuttal on those facts, failing which there would be a procedural irregularity leading to denial of natural justice. In these circumstances, we are of the view that the matter has to go back to the adjudicating authority who shall give a copy of the verification report (along with copies of the documents verified) to the appellants for their comments/rebuttal. The appellant is also at liberty to lead evidence in support of their claim that they have discharged the correct service tax liability. Thereafter, the adjudicating authority shall consider the matter afresh and pass a speaking order taking into the account the submissions made by the appellant. Thus the appeal is allowed by way of remand.
(Dictated in Court) (Ramesh Nair) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 5